Developers behind the faulty software at the heart of the Post Office scandal have apologised to its victims and agreed to contribute to the compensation of subpostmasters convicted using data from its system.
Appearing before a committee of MPs looking into the Post Office Horizon scandal, Fujitsu’s European director Paul Patterson apologised to the more than 900 subpostmasters wrongly prosecuted due to fundamental errors in its software.
Patterson told the Business and Trade Committee that the Japanese software giant has a “moral obligation” to contribute to the expected £1bn compensation bill due
“We have a part to play and to contribute to the redress fund for sub-postmasters,” he said.
Patterson added that the precise amount Fujitsu would contribute could only be determined once the current statutory inquiry into the scandal has concluded.
The Post Office, a limited company owned wholly by the UK government, has earmarked around a billion pounds to compensate wrongly convicted subpostmasters.
Bugs and errors from the start
Patterson told MPs that Fujitsu had known the Horizon IT system was faulty even before it was rolled out to Post Office branches in 1999.
“Fujitsu would like to apologise for our part in this appalling miscarriage of justice,” said Patterson. “We were involved from the very start. We did have bugs and errors from the start and we did help the Post Office with prosecutions of subpostmasters.”
A senior developer who worked on the initial project before it went live told Computer Weekly in an interview in 2021 that in the months leading up to its launch, Horizon’s problems were well-known inside Fujitsu.
Despite this, Horizon was rolled out to more than 14,000 branches. Many subpostmasters immediately began noticing discrepancies, with accounting records inexplicably altered or duplicate transactions created. When this was flagged with the Post Office, it chose to pursue, and in many cases prosecute, the subpostmasters for theft, fraud and false accounting.
At the statutory inquiry led by Sir Wyn Williams, also running today, former Fujitsu employees stated they knew that faults with the system the vendor used to extract Post Office transaction data that were subsequently used in the prosecution of hundreds of postmasters could lead to a legal challenge as early as 2008.
An email chain from 2010 shows that Fujitsu staff were concerned about “a very significant problem” with the Horizon IT system. This meant duplicate transactions were not corrected, while analysts also found duplicates in a third of all audit record query returns (ARQ) – data that was later used as evidence in court.
During the subpostmasters trial, Fujitsu engineers were called as witnesses by Post Office lawyers and testified that the Horizon system was robust and that the individual cases were just isolated examples. They also denied that Fujitsu had remote access to Post Office terminals – a claim that was later disproved.
A 2019 High Court ruling following a case brought by more than 500 of the affected subpostmasters concluded that the Horizon system was “not remotely robust”, and that “bugs, errors and defects” meant there was a “material risk” it was to blame for the faulty data used in the prosecutions.
‘Ongoing issues with suspense accounts’
Patterson was joined at the committee hearing by Nick Read, current chief executive of the Post Office.
Read’s evidence contained several jaw-dropping remarks, including an admission that the Post Office can’t locate much of the money taken from subpostmasters due to an “ongoing issue” with suspense accounts.
“We’ve had this investigated two or three times by external agents,” said Read, “but I don’t think we got to the bottom of what was going on with those suspense accounts … because the quality of the data wasn’t good enough.”
As the Post Office had little control over its internal accounting systems throughout the time it was prosecuting sub-postmasters, it didn’t know where money was going, nor could it properly account for where it came from.
A podcast recorded by investigative journalist Nick Wallis with a long-serving subpostmaster and a member of Second Sight, the forensic accountancy firm that went into the Post Office in 2012, looked into where the money that disappeared from branches had gone.
In an article accompanying the podcast, Wallis stated that any money the Post Office was credited which it couldn’t make sense of ended up in an internal suspense account – as admitted by Read in a parliamentary committee meeting in January 2021.
According to a source Wallis had spoken to familiar with the system, after three years if entries in a suspense account were not identified and/or claimed, the cash was swept into the Post Office’s P&L account and counted as profit – potentially forming part of the organisation’s executive bonus scheme.
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‘Culture of denial’
Speaking at today’s committee hearing, Read, who joined the Post Office in 2019, said the organisation had been in a “culture of denial”.
The Post Office still runs an updated version of the Horizon system and last year the government agreed to extend the contract to 2025 for an additional £36m. Read told today’s Parliamentary hearing that the organisation is committed to “get off Horizon” once the current contract extension expires in 2025.
Read also confirmed that the Post Office was in talks with HMRC about the tax treatment of compensation payments to subpostmasters.